Correlation Between Loandepot and Byline Bancorp

Can any of the company-specific risk be diversified away by investing in both Loandepot and Byline Bancorp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Loandepot and Byline Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Loandepot and Byline Bancorp, you can compare the effects of market volatilities on Loandepot and Byline Bancorp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Loandepot with a short position of Byline Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loandepot and Byline Bancorp.

Diversification Opportunities for Loandepot and Byline Bancorp

0.09

Correlation Coefficient

Loandepot  Byline Bancorp

Significant diversification

The 3 months correlation between Loandepot and Byline is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Loandepot and Byline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byline Bancorp and Loandepot is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Loandepot are associated (or correlated) with Byline Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Byline Bancorp has no effect on the direction of Loandepot i.e., Loandepot and Byline Bancorp go up and down completely randomly.

Pair Corralation between Loandepot and Byline Bancorp

Considering the 90-day investment horizon Loandepot is expected to under-perform the Byline Bancorp. In addition to that, Loandepot is 1.97 times more volatile than Byline Bancorp. It trades about -0.02 of its total potential returns per unit of risk. Byline Bancorp is currently generating about 0.1 per unit of volatility. If you would invest  2,671  in Byline Bancorp on September 5, 2024 and sell it today you would earn a total of  447.00  from holding Byline Bancorp or generate 16.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Loandepot  vs.  Byline Bancorp

Loandepot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loandepot has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Loandepot is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Byline Bancorp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Byline Bancorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Byline Bancorp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Loandepot and Byline Bancorp

The main advantage of trading using opposite Loandepot and Byline Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loandepot position performs unexpectedly, Byline Bancorp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Byline Bancorp will offset losses from the drop in Byline Bancorp's long position.

The idea behind Loandepot and Byline Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.